arcp and cole merger to create world's largest net lease reit

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ARCP and Cole Merger to Create World’s Largest Net Lease REIT November 12, 2013

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Page 1: ARCP and Cole Merger to Create World's Largest Net Lease REIT

ARCP and Cole Merger to

Create World’s Largest Net Lease REIT

November 12, 2013

Page 2: ARCP and Cole Merger to Create World's Largest Net Lease REIT

2

Information set forth herein (including information included or incorporated by reference herein) contains “forward-looking

statements” (as defined in Section 21E of the Securities Exchange Act of 1934, as amended), which reflect American Realty

Capital Properties, Inc.’s (“ARCP”), American Realty Capital Trust IV, Inc.’s (“ARCT IV”) and Cole Real Estate Investments, Inc.’

(“Cole”) expectations regarding future events. The forward-looking statements involve a number of risks, uncertainties and other

factors that could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-

looking statements include, but are not limited to, whether and when the transactions contemplated by any of the merger

agreements will be consummated, the combined company’s plans, market and other expectations, objectives, intentions, as well as

any expectations or projections with respect to the combined company, including regarding future dividends and market valuations,

and estimates of growth, including funds from operations and adjusted funds from operations and other statements that are not

historical facts.

The following additional factors, among others, could cause actual results to differ from those set forth in the forward-looking

statements: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of any of the

merger agreements; (2) the inability to complete the ARCT IV merger due to the failure to obtain ARCT IV stockholder approval

of the ARCT IV merger or the failure to satisfy other conditions to completion of the ARCT IV merger, including that a

governmental entity may prohibit, delay or refuse to grant approval for the consummation of the ARCT IV merger; (3) the inability

to obtain regulatory approvals for the Cole merger transaction and the approval by ARCP’s stockholders of the issuance of ARCP

common stock in connection with the Cole merger and the approval by Cole’s stockholders of the Cole merger; (4) risks related to

disruption of management’s attention from the ongoing business operations due to the proposed mergers; (5) the effect of the

announcement of the proposed mergers on ARCP’s, ARCT IV’s or Cole’s relationships with their respective customers, tenants,

lenders, operating results and businesses generally; (6) the outcome of any legal proceedings relating to any of the mergers or the

merger agreements; and (7) risks to consummation of the mergers, including the risk that the mergers will not be consummated

within the expected time period or at all. Additional factors that may affect future results are contained in ARCP’s, ARCT IV’s and

Cole’s filings with the U.S. Securities and Exchange Commissions (“SEC”), which are available at the SEC’s website

at www.sec.gov. ARCP, ARCT IV and Cole disclaim any obligation to update and revise statements contained in these materials

based on new information or otherwise.

Forward-Looking Statements

Page 3: ARCP and Cole Merger to Create World's Largest Net Lease REIT

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Executive Summary

Merger to Create the World’s Largest Net Lease REIT: 64% larger than the closest comparable net lease REIT.

Size and scale create operating and revenue efficiencies including lower cost of capital, superior growth

opportunities and higher investor returns.

Significant Operating Efficiencies: $70 million of annual expense synergies expected in the first year.

Financial Benefits Include Dividend Increase and AFFO Growth: Dividend per share on closing increases to

$1.00. 86%(1) AFFO payout ratio still allows for future dividend increases during 2014. Guidance for 2014 AFFO

growth estimates updated to $1.13 – $1.19 per share (fully diluted)(1).

Best-in-Class Portfolio: Superior diversification by asset type tenancy, industry and geography, 47% investment

grade tenancy, 99% occupied, 11 years remaining average lease term.

Deleveraging: Net debt to EBITDA ratio declines from 9.1x to 7.7x by year-end 2014. Including preferred

securities, net debt to EBITDA ratio declines from 11.2x to 8.7x(1).

Exceptional Human Capital: Unification of ARCP and Cole management teams forge competitive advantage

from deep industry knowledge and broad industry relationships.

Extensive Portfolio Integration Experience: ARCP has extensive experience managing all aspects of

approximately $12 billion of mergers and announced acquisitions year-to-date.

(1) Assumes Cole stockholders elect merger consideration of 80% common stock and 20% cash.

Page 4: ARCP and Cole Merger to Create World's Largest Net Lease REIT

4

Summary of Material Merger Terms

Consideration per Cole Common Share: • 1.0929 ARCP shares fixed exchange ratio or $13.82 cash

• Aggregate cash election limited to 20% (subject to proration)

• Implied stock consideration of $14.59 represents a 13.8% premium to Cole stockholders based on

closing price on October 22, 2013

Common Dividend: • ARCP common dividend increases $0.06 from $0.94(1) to $1.00 per share at closing:

- ARCP stockholders: 6.4% dividend increase

- Cole stockholders: 51.8%(2) dividend increase

Financing: • $2.75 billion fully committed financing provided by Barclays

Timing: • Closing expected in first half of 2014

• Subject to SEC review, stockholder vote of both companies and other closing conditions

(1) ARCP increased its current dividend of $0.91 to $0.94 upon the close of the transaction with CapLease, Inc.

(“CapLease”) effective upon ARCP’s December 2013 dividend payment.

(2) Based on an exchange ratio of 1.0929 multiplied by ARCP pro forma dividend per share of $1.00 and Cole’s

existing dividend per share of $0.72.

ARCP acquiring Cole for $11.2 Billion (including assumption of debt)

Page 5: ARCP and Cole Merger to Create World's Largest Net Lease REIT

Net Lease Leadership

5

Page 6: ARCP and Cole Merger to Create World's Largest Net Lease REIT

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REIT Name

Equity Cap

(mm) Industry

S&P 500

Inclusion

Dividend

Yield # of Analysts

1 Simon Property Group, Inc. $49,575 Regional Mall Yes 2.9 % 27

2 American Tower Corporation (REIT) 31,651 Specialty Yes 1.4 % 23

3 Public Storage 29,487 Self-Storage Yes 2.9 % 22

4 Weyerhaeuser Company 17,660 Specialty Yes 2.9 % 15

5 Equity Residential 19,988 Multi-family Yes 2.9 % 23

6 Prologis, Inc. 20,283 Industrial Yes 2.8 % 20

7 HCP, Inc. 19,381 Health Care Yes 4.9 % 18

8 Ventas, Inc. 19,306 Health Care Yes 4.1 % 15

9 Health Care REIT, Inc. 18,643 Health Care Yes 4.7 % 19

10 AvalonBay Communities, Inc. 17,372 Multi-family Yes 3.2 % 22

11 Vornado Realty Trust 16,773 Diversified Yes 3.3 % 14

12 Boston Properties, Inc. 16,667 Office Yes 2.4 % 22

13 Host Hotels & Resorts, Inc. 13,913 Hotel Yes 2.6 % 24

ARCP Pro Forma(1) 9,292 Net Lease 7.5% 5

14 Kimco Realty Corp. 8,615 Shopping Center Yes 4.0% 22

15 Macerich Company 8,325 Regional Mall Yes 3.9% 21

Peer Average: 3.3% 21

Broader “Permanent” Ownership | Added Liquidity and Price Support | Increased Research Coverage

Net Lease Leadership: S&P 500 Constituency

Source: SNL Financial. Peer equity capitalization as of October 22, 2013.

(1) Represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger, the remaining

acquisitions of the Inland and Fortress portfolios and other pipeline properties, and the proposed Cole merger. Dividend

yield reflects $1.00 per share based on ARCP closing price on October 22, 2013. Assumes Cole stockholders elect

merger consideration of 80% common stock and 20% cash.

Page 7: ARCP and Cole Merger to Create World's Largest Net Lease REIT

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Net Lease Leadership: Greater MSCI US REIT Index

(“RMZ”) Weighting

Source: SNL Financial as of October 22, 2013.

(1) ARCP represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger,

the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties. Assumes Cole

stockholders elect merger consideration of 80% common stock and 20% cash.

RMZ Top 15 | Superior Access to Capital | Enhanced Ability to Fund Future Growth

Company

Market Cap

(% of Total RMZ)

3-Month Avg. Daily

Trading Volume ($ in

millions)

Dividend

Yield

Net Debt/

EBITDA

1 Simon Property Group 8.8% $195 2.9% 6.2x

2 Public Storage 5.3% 87 2.9% N/M

3 General Growth Properties 3.6% 69 2.7% 8.5x

4 Equity Residential 3.6% 93 2.9% 7.1x

5 Prologis 3.5% 87 2.8% 7.3x

6 HCP 3.5% 122 4.9% 5.4x

7 Ventas 3.4% 102 4.1% 5.2x

8 Health Care REIT 3.3% 110 4.7% 6.1x

9 AvalonBay Communities 3.1% 82 3.2% 5.7x

10 Vornado Realty Trust 3.0% 72 3.3% 6.9x

11 Boston Properties 3.0% 92 2.4% 6.6x

12 Host Hotels & Resorts 2.5% 112 2.6% 3.3x

ARCP Pro Forma(1) 1.6% 156 7.5% 7.7x

13 SL Green Realty Corp 1.6% 60 2.2% 9.4x

14 Kimco Realty Corp 1.5% 69 4.0% 6.4x

15 Macerich Co 1.5% 50 3.9% 7.5x

Top 15 51.2% $1,402 3.3% 6.6x

Page 8: ARCP and Cole Merger to Create World's Largest Net Lease REIT

$0

$10

$20

$30

$40

$50

$60

$70

2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 YTD

Bil

lio

ns

Total Enterprise Value – Net Lease Peers

ARCP

COLE

ADC

CSG

SRC

LSE

WPC

LXP

NNN

O

8

Net Lease Leadership: Sector Growth and Consolidation

Source: SNL Financial as of October 22, 2013.

(1) 2013 ARCP represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger,

the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties.

(2) WPC includes announced acquisition of CPA:16.

$13.1 $13.9 $16.5

$18.7

$32.1

$64.2

(1)

Ticker

(2)

2008 2009 2010 2011 2012

Page 9: ARCP and Cole Merger to Create World's Largest Net Lease REIT

9

Net Lease Leadership: Capitalizing on Consolidation

Greater Sector Acceptance:

• Previously characterized as “other” and under-covered, the net lease sector is now

highly relevant due to growth and consolidation

- Over $27 billion in net lease M&A in the last 24 months

Stable Income Investment:

• Attractive for investors seeking dividend generation and income stability

Scale Advantages:

• Increased scale creates operating and revenue synergies

- Superior access to deals

- Ability to absorb larger transactions

- Strategic partner to corporate real estate – lead dialogue on sale-leaseback

and conversion

Consolidation:

• Similar M&A trends as in other sectors: Healthcare, Industrial, and Self-Storage

Size and Skill Matters:

• Leaders and innovators accelerate while competitors lag

Page 10: ARCP and Cole Merger to Create World's Largest Net Lease REIT

Portfolio Statistics

10

Page 11: ARCP and Cole Merger to Create World's Largest Net Lease REIT

Properties 3,732

Total Square Feet 102 million

Investment Grade (by

Rent) 47%

Occupancy 99%

Average Remaining Lease

Term (by Rent) 11 years

Enterprise Value(2) $21.5 billion

Pro Forma

11

Source: SNL Financial, SEC filings and Company models.

(1) Represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger,

the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties, and the proposed

Cole merger.

(2) Based on ARCP and Cole stock price as of market close on October 22, 2013.

Best-in-Class Portfolio

Largest and Highest Quality Net Lease REIT

(1)

Page 12: ARCP and Cole Merger to Create World's Largest Net Lease REIT

100% of Top 10

Tenants are Rated

12

ARCP Pro Forma(1)

% of Rent Rating

3.5% BBB

3.1% A-

2.9% BBB+

2.5% BBB-

2.1% BBB

2.0% BB+

2.0% B

1.9% BBB-

1.9% AA+

1.8% A

Total 23.7% 83.1%

Best-in-Class Portfolio: Leading Investment Grade

Tenancy Among Top 10 Tenants

Strong and Diverse Tenant Base

Note: Weighted based on GAAP rent, including multi-tenant assets owned by Cole.

(1) Represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger,

the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties, and the proposed Cole

merger.

83.1%

16.9% Investment

Grade Rated

Non-

Investment

Grade

Page 13: ARCP and Cole Merger to Create World's Largest Net Lease REIT

13

Single Tenant Retail

Single Tenant Industrial/Distribution

Single Tenant Office

Multi-Tenant Retail

54.9%

26.2%

18.9%

23.9%

11.1%

51.1%

13.9%

ARCP ARCP Pro Forma

Source: SNL Financial, SEC filings and Company models.

Note: Weighted by unadjusted book value.

(1) Represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger,

the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties.

Best-in-Class Portfolio: Asset Diversification

COLE

46.3%

21.0%

25.0%

7.7%

(1)

Page 14: ARCP and Cole Merger to Create World's Largest Net Lease REIT

14

ARCP(1) ARCP Pro Forma COLE

Best-in-Class Portfolio: Geographic Diversification

State % State % State %

TX 10.7% TX 16.3% TX 13.2%

IL 7.0% GA 8.2% FL 6.3%

PA 6.1% AZ 8.1% IL 6.2%

FL 6.0% CA 7.4% CA 6.2%

CA 5.1% FL 6.8% GA 5.8%

MO 4.3% IL 5.3% AZ 4.1%

OH 4.3% NJ 3.4% PA 4.0%

IN 4.2% OH 3.2% OH 3.8%

GA 4.0% MI 3.2% MI 3.4%

MI 3.6% SC 3.0% IN 3.1%

55.3% 64.8% 56.1%

Source: SNL Financial, SEC filings and Company models.

Note: Weighted by unadjusted book value.

(1) Represents pro forma balances including the completion of the CapLease merger, the ARCT IV merger,

the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties.

Page 15: ARCP and Cole Merger to Create World's Largest Net Lease REIT

15

15 (1) Based on percentage of GAAP rent. Represents pro forma balances including the completion of the CapLease merger,

the ARCT IV merger, the remaining acquisitions of the Inland and Fortress portfolios and other pipeline properties,

and the proposed Cole merger.

4.0% of Leases Mature on Average in the Next 5 Years

Best-in-Class Portfolio: Attractive Lease Maturity

Profile

Weighted Average Remaining Lease Term: 11 Years

1.6%

2.8% 4.1%

6.3% 5.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2014 2015 2016 2017 2018

ARCP Pro Forma Lease Maturities – Next 5 Years(1)

Page 16: ARCP and Cole Merger to Create World's Largest Net Lease REIT

Financial Analysis

16

Page 17: ARCP and Cole Merger to Create World's Largest Net Lease REIT

17

Business Contribution(1)

Pro Forma 2014 Includes $2B of Acquisitions, as Referenced in Guidance

3,732 Properties (102M SF)

99% Occupancy

$1,433M in Total Revenue

$1,247M in EBITDA

$814M in AFFO

$1.13 - $1.19 AFFO/share 2014E

ARCP(2) (12-months) Cole

Real Estate (9-months)

Cole Private Capital

Management (9-months)

(1) All dollar amounts are shown on a pro forma basis for 2014 (i.e., 12-months of ARCP activity and 9-months of Cole activity for 2014).

(2) Represents the completion of the CapLease merger, the ARCT IV merger, the remaining acquisitions of the Inland and Fortress portfolios, and other pipeline properties.

Assumes closing of the proposed Cole merger on April 1, 2014.

(3) Pro forma 2014 guidance.

(4) Includes actual results through September and estimates for remainder of 2013.

2,706 Properties (57M SF)

99% Occupancy

1,026 Properties (44M SF)

99% Occupancy

$3.6B 2013E Equity Raise(4)

$3.1B 2014E Equity Raise

$70M of combined annualized G&A synergies

RE Revenue EBITDA

Per Guidance(3) $654 $574

2014 Acq's $92 $92

Synergies - $13

Acq. Costs - (14)

Adjusted $746 $665

RE Revenue EBITDA

Per Guidance(3) $487 $438

2014 Acq's $37 $37

Int. Income ($20) ($20)

Synergies - $14

Acq. Costs - ($5)

Adjusted $504 $464

PCM Revenue EBITDA

Per Guidance(3) $183 $91

Synergies - $26

Adjusted $183 $117

Page 18: ARCP and Cole Merger to Create World's Largest Net Lease REIT

18

(1) Includes actual results through September and estimates for remainder of 2013.

(2) Includes actual results through October, 2013.

(3) Pre-synergy EBITDA.

$2.2

$3.6 $3.1

ARC:

$3.14

COLE:

$3.13

$0

$1

$2

$3

$4

$5

$6

$7

2013 Original Forecast 2013 Revised Forecast(1) 2014 Revised Forecast 2013 Actual YTD

ARC+COLE Net Lease

Total Revenue(2)

Bil

lion

s Net Lease Equity Raise

$1.4

$2.2

PCM Capital Raise Projections vs. Actual Performance

Annualized Forecast 2013 Original 2013 Revised 2014 Revised

PCM Revenues, net $157 $204 $240

PCM EBITDA(3) $51 $80 $121

(In millions)

$6.3

Page 19: ARCP and Cole Merger to Create World's Largest Net Lease REIT

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2014

Low High

Net income attributable to stockholders (in accordance with GAAP) $0.53 $0.59

Acquisition and transaction related costs $0.04 $0.04

Depreciation and amortization $0.57 $0.57

FFO $1.14 $1.20

Amortization of deferred financing costs $0.02 $0.02

Straight-line rent ($0.05) ($0.05)

Non-cash equity compensation expense $0.02 $0.02

AFFO $1.13 $1.19

Non-GAAP – FFO/AFFO Reconciliation

Note: Based upon weighted average fully diluted shares outstanding. Assumes a 20% cash election by Cole stockholders.

Earnings Sensitivities:

• Raising capital in 2014 at an average price of $13.00 per share results in AFFO of $1.16 per share.

• 0% cash election by Cole shareholders implies 12 million additional shares raised in 2014, as opposed to

104 million, resulting in AFFO of $1.17 per share.

• No acquisitions during 2014 results in AFFO of $1.13 per share.

Page 20: ARCP and Cole Merger to Create World's Largest Net Lease REIT

20

Earnings Guidance Detail

(In millions, except per share amounts)

Additional

Opportunities to

Enhance Profitability:

• More successful non-

traded REIT capital

raising.

• Profit participation

upon non-traded

REIT monetizations.

• Balance sheet

management.

• Greater savings from

investment-grade

borrowing costs.

• CPI escalators and

future percentage rent

growth.

(1) Represents 12 months of 2014 activity, excluding assumed acquisitions. Revenues based on average rent according to GAAP.

(2) Assumes closing of the proposed Cole merger on April 1, 2014, representing 9 months of activity, excluding assumed acquisitions.

PCM revenue shown net of reallowed broker dealer expenses. Revenues based on average rent according to GAAP.

(3) Includes $2 billion of acquisitions for 2014.

(4) Includes payment of all preferred stock dividends (i.e., subtracted from net income) of $70.7 million from ARCP, $0 from Cole.

2014

ARCP(1)

Cole(2)

Adjustments Acquisitions(3)

Total Run Rate

Revenues 654$ 467$ -$ 129$ 1,250$ 1,442$

PCM revenue, net - 183 - - 183 240

Interest income - 20 (20) - 0 -

Total revenue 654 669 1,433 1,682

Operating expense, net (8) (9) - - (18) (21)

Transaction expenses - - - (19) (19) -

General and adminstrative (72) (131) 53 - (150) (176)

Total expenses (80) (140) (186) (196)

EBITDA 574$ 529$ 1,247$ 1,486$

Fixed charges and taxes (255) (132) (15) (15) (417) (456)

Net earnings 319 397 829 1,030

Plus: Transaction expenses - - - 19 19 -

Funds from operations 319 397 848 1,030

Adjustments (3) (11) (16) (3) (33) (43)

Adjusted funds from operations(4)

316$ 386$ 814$ 986$

Wtd. Average Shares Outstanding 684 829

AFFO per share 1.19$ 1.19$

2014 AFFO per share Earnings GuidanceRange

$1.13 to $1.19

2014 Pro Forma

Page 21: ARCP and Cole Merger to Create World's Largest Net Lease REIT

21

Pro Forma Capitalization

(1) Assumes closing of the proposed Cole merger on April 1, 2014

(2) The 496.8 million Cole shares includes an amount of shares assuming the Cole Holdings incentive consideration is paid fully in stock. Following the effect of the exchange ratio (1.0929), these aggregate

Cole shares total 543.0 million shares of ARCP. Assuming shareholders elect 20% cash consideration, such total shares are reduced by 108.6 million shares to 434.4 million (i.e. 496.8 million Cole shares

less 62.4 million shares).

(3) Blended price per share equal to 80% stock election of 1.0929 exchange ratio plus 20% cash election at $13.82 per share.

(4) Excluding proposed asset sales of $170 million.

(5) Weighted average maturity only on fixed rate debt.

(In millions, except per share amounts)

Estimate as of December 31, 2013 Pro Forma at Merger Close(1)

ARCP Cole Adjustments Pro Forma

Fully diluted shares outstanding 290 497 (2 ) (62) 725

Price per share @ 11/1/13 13.30$ 14.39$ (3 ) - -

Equity capitalization 3,863$ 7,151$ -$ 11,014$

Less: 20% cash election - - (1,373) (1,373)

Equity Capitalization, Net 3,863$ 7,151$ (1,373)$ 9,641$

Preferred stock (at par value) 1,073 - - 1,073

Total Equity Capitalization 4,937$ 7,151$ (1,373)$ 10,714$

Maturity Interest Rate

Mortgage debt 1,740 2,817 - 4,557 5.1 years 4.6%

Term loan 600 500 - 1,100 3.9 years 2.3%

Credit facility 1,004 470 (470) 1,004 - 1.6%

Convertible notes 310 - - 310 4.7 years 3.0%

CapLease credit facility 150 - - 150 - 3.0%

CapLease senior notes 19 - - 19 13.9 years 7.5%

CapLease trust preferred 31 - - 31 22.2 years 7.7%

Long-term debt 1,867 - 2,095 3,962 ~8 years 4.2%

Total Debt Capitalization(4)

5,721$ 3,787$ 1,625$ 11,133$ 6.2 years (5) 3.9%

Total Capitalization 10,658$ 10,938$ 252$ 21,847$

(89% fixed rate debt)

Weighted Average

Page 22: ARCP and Cole Merger to Create World's Largest Net Lease REIT

22

Pro Forma Capitalization Detail

(1) The CapLease transaction closed on November 5, 2013.

(2) Cole transaction assumes 20% cash election.

(3) “Existing” denotes items that are part of ARCP, “assume” denotes items to be assumed by ARCP, “complete” denotes new financings that have been

arranged, and “pending” denotes new financing in process.

(In millions, except per share amounts)

ARCP ARCP PF

Capitalization CapLease(1)

ARCT IV Add'l Acq. Cole(2)

Capitalization

Stock / Units Issued to Target 245 - 45 - 434 725

Price per share @ 11/1/13 $13.30 - $13.30 - $13.30 $13.30

Total Equity Value $3,262 $0 $602 $0 $5,778 $9,641

Preferred Equity

ARCT IV Perpetual Preferred Equity - - 1,073 - - 1,073

Total Preferred Equity $0 $0 $1,073 $0 $0 $1,073

Debt

Mortgage Debt Status(3)

ARCP existing 270 - - - - 270

CapLease existing - 1,052 - - - 1,052

ARCT IV assume - - 2 - - 2

Inland assume - - - 308 - 308

Fortress assume - - - 108 - 108

Cole assume - - - - 2,817 2,817

Total 270 1,052 2 415 2,817 4,557

Term Debt & Credit Facilities

Term loans existing $600 - - - $500 $1,100

ARCP revolver existing 75 929 - - - 1,004

ARCP convertible debt existing 310 - - - - 310

CapLease revolver existing - 150 - - - 150

CapLease senior notes existing - 19 - - - 19

CapLease trust preferred existing - 31 - - - 31

Total $985 $1,129 $0 $0 $500 $2,614

New Financings

Commited term debt complete - - 755 - - 755

Long term debt pending - - 712 400 $2,095 3,207

Total $0 $0 $1,467 $400 $2,095 $3,962

Total Debt $1,255 $2,182 $1,469 $815 $5,412 $11,133

Asset Sales

Proposed asset sale - - - 170 - 170

Total Asset Sales $0 $0 $0 $170 $0 $170

Total $4,517 $2,182 $3,144 $985 $11,190 $22,018

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23

$70 Million of Annualized Synergies in Year One

Expected Synergy Details – Year End 2014

Note: Realty Income and National Retail Properties is full-year information based on public filings.

(In millions)

ARCP Cole Total

Executive compensation $1.0 $3.5 $4.5

Hiring freeze and attrition $10.1 $3.5 $13.6

Stock compensation $0.0 $7.8 $7.8

G&A expense reduction $2.8 $14.0 $16.8

Corporate expense elimination $4.1 $23.7 $27.8

Total Annualized Synergies $18.0 $52.5 $70.5

Combined G&A before synergies $246

Synergies % of G&A 29%

Combined G&A after synergies $176

Less: PCM G&A $86

Real Estate G&A $90

Real Estate G&A / Gross Assets ($22.2B) 0.41%

Comparables:

Realty Income - G&A / Gross Assets 0.64%

National Retail Properties - G&A / Gross Assets 0.80%

Page 24: ARCP and Cole Merger to Create World's Largest Net Lease REIT

24

Implied Real Estate Capitalization Rate

(In millions, except per share amounts)

(1) Blended price per share equal to 80% stock election of 1.0929 exchange ratio plus 20% cash election at $13.82 per share.

(2) Based upon net income multiple of public alternative asset managers.

Shares Outstanding 497

Purchase Price per Share $14.39 (1)

Implied Equity Value $7,150

Debt $3,787

Total Asset Value $10,937

Less: PCM Business ($740)

Less: Other Assets and Liabilities ($20)

Implied Gross Real Estate Asset Value $10,177

Real Estate Net Operating Income $637

Implied Acquisition Cap Rate 6.3%

RE NOI + PCM NI $711

Implied All-In Yield 6.5%

PCM Business Valuation

Net Income (Including Post-tax Synergies of $33M) $74

Net Income Multiple(2)

10x

Value of PCM Business $740

Page 25: ARCP and Cole Merger to Create World's Largest Net Lease REIT

25

Shares Outstanding Guidance

Fully Diluted Shares &

Share Equivalents

Pro forma as of December 31, 2013(1) 290,486,000

Common shares issued in connection with the Cole transaction

(20% cash consideration)

434,401,000

Total additional shares projected to be issued in 2014 103,906,000(2)

Pro forma as of December 31, 2014 828,793,000

Weighted average shares outstanding for the year ending

December 31, 2014

684,431,000

(1) Includes additional shares for fully diluted purposes consisting of Series D preferred shares, as converted, of 21.7 million shares,

plus other restricted stock.

(2) Includes common shares issued under the Company's universal shelf registration, share equivalents directly issued in connection

with acquiring real estate investments and common shares issued to fund a portion of the purchase of real estate investments.

The average estimated issuance price per share during 2014 is $14.93.

Page 26: ARCP and Cole Merger to Create World's Largest Net Lease REIT

Moving Toward Self-Management

26

Page 27: ARCP and Cole Merger to Create World's Largest Net Lease REIT

27

Paul McDowell

Office, Industrial &

Build-to-Suit AUM: $7.0 billion

Retail & Warehouse

Distribution AUM: $10.1 billion

Restaurants AUM: $2.7 billion

Private Capital

Management AUM: $5 billion

General Counsel Lisa Beeson

Chief Operating Officer

Brian S. Block

Chief Financial Officer

President

Pro Forma Organizational Chart

Supported by a team of experienced professionals

Asset Management Property

Management Accounting Legal

Human

Resources

Capital

Markets

Originations Underwriting Due Diligence Financing

Investor

Relations

Marketing

Board of Directors

6 Independent Directors, including addition of 2 Independents from Cole

Chief Executive Officer

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28

Uniquely Qualified Dedicated Senior Management Team

- Prior Experience -

Public Traded

Companies

Public Non-Traded

Companies Broker Dealer

• American Realty

Capital Properties

(NASDAQ: ARCP)

2011

• American Realty

Capital Trust

(NASDAQ: ARCT)

2012

• RCS Capital

Corporation

(NYSE: RCAP) 2013

• American Financial

Realty Trust

(NYSE: AFR) 2003

• ARCT

• ARC HT

• ARC HT II

• ARC Global

• ARC Daily NAV

• ARCT III

• ARCT IV

• ARCT V

• NYRR

• Retail Centers

Wholesale

• RCS Securities

Retail

• First

Allied/Legend

• ICC

$400 Billion of M&A Transactions since 2000

with recent net lease focus, including:

• Lexington Corporate Properties/Newkirk Realty Trust.

• Spirit Realty Capital/Cole Credit Properties Trust II

• Corporate Property Associates 16/W.P. Carey Inc.

• American Realty Capital Properties/Cole Real Estate Investments

Brian S. Block Chief Financial Officer

Lisa Beeson Chief Operating Officer

Brian and Lisa will be

dedicated to ARCP.

Their combined

intellectual capital

should prove vital to

the operation and

growth of the

enterprise going

forward, including

senior level in depth

experience in finance,

accounting, capital

markets, mergers and

acquisitions, across

the public traded and

non-traded sectors,

and with retail and

institutional investors.

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29

Brian S. Block – Chief Financial Officer

Uniquely qualified financial executive with 20 years experience, including public and corporate

accounting, and as chief financial officer of public-traded and non-traded companies; skill set

includes wholesale and retail broker dealer issues, SEC and FINRA matters, and integration of

corporate and portfolio assets, systems and management teams.

Public Accounting Experience

• 1994 to 2000 – Ernst & Young and Arthur Andersen

• Focused on initial public offerings, material capital markets events, mergers and acquisitions

Corporate Accounting Experience

• 2001 – CFO venture capital-backed technology company

• 2002 to 2007 – American Financial Realty Trust – Chief Accounting Officer

• Led initial public offering 2003 on NYSE

• Oversaw implementation of Sarbanes-Oxley 2004

• Responsible for all SEC filings

• Supervised integration of over $4 billion of acquired real estate investments

• Managed technology system conversions and all application integrations

Chief Financial Officer Experience

• Public Traded Companies: American Realty Capital Properties (NASDAQ: ARCP) and RCS Capital Corporation

(NYSE: RCAP)

• Public Non-Traded Companies: Multiple public non-traded REITs; internalized and listed ARCT I; integrated ARCT

III, ARCT IV, CapLease and significant property portfolios in ARCP; over $10 billion of acquired real estate

• Wholesale Broker Dealer: Realty Capital Securities (“RCS”), a FINRA licensed wholesale broker dealer (formed

2008); operating subsidiary of RCAP; leading dealer manager for multiple non-traded REIT offerings; experienced in

due diligence process performed by independent broker dealers

• SEC/FINRA: Deep experience with SEC and FINRA regulations and compliance matters

• Integration: Supervised integration of $12 billion of equity raised within private capital management arena

• 2007 to Present – CFO/Partner AR Capital, privately-owned holding company

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30

Lisa Beeson – Chief Operating Officer

Uniquely qualified seasoned financial and capital markets executive with 25 years experience,

including over $400 billion of M&A transactions closed since 2000, with a recent focus on net

lease transactions; experience in real estate asset management with a principal’s mindset

Strategic M&A Outlook

• Setting strategy, evaluating acquisition and divestiture opportunities, and capital allocation.

• Designing capital structure and managing investor/lender relationships

• Broad industrial and retail experience outside real estate sector

• Advised Barclay’s on REO assets, including Archstone and Crescent

Significant Asset Management Experience and Principal Mindset

• “Buy-side” Advice:

• ING

• RREEF

Recent net lease transactions

• Lexington Corporate Properties/Newkirk Realty

• Spirit Realty Capital/Cole Credit Properties Trust II

• Corporate Property Associates 16/W.P. Carey

• Cerberus' acquisition of grocery chains from and investment in SuperValu

• American Realty Capital Properties/Cole Real Estate Investments

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31

Experienced

Senior Management • Experience in building and

managing publicly traded and

non-traded companies

• Expertise in constructing and

managing net lease real estate

portfolios

• Skill in navigating capital

markets

• Dedicated and focused

executive and senior

management team

Best-in-Class Portfolio • High quality properties: Main & Main locations, strong credit quality

tenant roster and brand identity

• Stable income with outsized growth potential

• Diversified by tenant, industry, geography and property type

• Value-add private capital management platform

Value

Proposition

Enhanced Scale and

Competitiveness

Durable Dividends

Principal Protection

Outsized Growth Potential

Strong, Flexible

Balance Sheet • Cost of Capital Advantage

• Operational Efficiencies and

Cost Reductions

• Financial capacity

• Financial flexibility

• Investment-grade rating

ARCP Offers a Compelling Value Proposition

Page 32: ARCP and Cole Merger to Create World's Largest Net Lease REIT

32

Funds from Operations and Adjusted Funds from Operations

ARCP considers funds from operations (“FFO”) and AFFO, which is FFO as adjusted to exclude acquisition-related fees and

expenses, amortization of above-market lease assets and liabilities, amortization of deferred financing costs, straight-line rent, non-

cash mark-to-market adjustments, amortization of restricted stock, non-cash compensation and gains and losses useful indicators of

the performance of a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets

and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions

based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between

periods and between other REITs in our peer group. Accounting for real estate assets in accordance with generally accepted

accounting principles (“GAAP”) implicitly assumes that the value of real estate assets diminishes predictably over time. Since real

estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the

presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.

FFO and AFFO are not in accordance with, or a substitute for, measures prepared in accordance with GAAP, and may be different

from non-GAAP measures used by other companies. In addition, FFO and AFFO are not based on any comprehensive set of

accounting rules or principles. Non-GAAP measures, such as FFO and AFFO, have limitations in that they do not reflect all of the

amounts associated with ARCP's results of operations that would be reflected in measures determined in accordance with GAAP.

These measures should only be used to evaluate ARCP's performance in conjunction with corresponding GAAP measures.

Additionally, ARCP believes that AFFO, by excluding acquisition-related fees and expenses, amortization of above-market lease

assets and liabilities, amortization of deferred financing costs, straight-line rent, non-cash mark-to-market adjustments,

amortization of restricted stock, non-cash compensation and gains and losses, provides information consistent with management's

analysis of the operating performance of the properties. By providing AFFO, ARCP believes it is presenting useful information that

assists investors and analysts to better assess the sustainability of our operating performance. Further, ARCP believes AFFO is

useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other

real estate companies, including exchange-traded and non-traded REITs.

As a result, ARCP believes that the use of FFO and AFFO, together with the required GAAP presentations,

provide a more complete understanding of our performance relative to our peers and a more informed and

appropriate basis on which to make decisions involving operating, financing, and investing activities.

Page 33: ARCP and Cole Merger to Create World's Largest Net Lease REIT

33

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any

vote or approval. In connection with the proposed Cole merger, ARCP and Cole expect to prepare and file with the SEC a

registration statement on Form S-4 containing a joint proxy statement/prospectus and other documents with respect to ARCP’s

proposed acquisition of Cole. The joint proxy/prospectus will contain important information about the proposed transaction and

related matters. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL

AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED BY ARCP OR COLE

WITH THE SEC CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN

IMPORTANT INFORMATION ABOUT ARCP, COLE AND THE PROPOSED COLE MERGER.

Investors and stockholders of ARCP and Cole may obtain free copies of the registration statement, the joint proxy

statement/prospectus and other relevant documents filed by ARCP and Cole with the SEC (if and when they become available)

through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by ARCP with the SEC are also

available free of charge on ARCP’s website at www.arcpreit.com and copies of the documents filed by Cole with the SEC are

available free of charge on Cole’s website at www.ColeREIT.com.

ARCP, Cole, AR Capital, LLC and their respective directors and executive officers may be deemed to be participants in the

solicitation of proxies from ARCP’s and Cole’s stockholders in respect of the proposed Cole merger. Information regarding

ARCP’s directors and executive officers can be found in ARCP’s definitive proxy statement filed with the SEC on April 30, 2013.

Information regarding Cole’s directors and executive officers can be found in Cole’s definitive proxy statement filed with the SEC

on April 11, 2013. Additional information regarding the interests of such potential participants will be included in the joint proxy

statement/prospectus and other relevant documents filed with the SEC in connection with the proposed Cole merger if and when

they become available. These documents are available free of charge on the SEC’s website and from ARCP or Cole, as applicable,

using the sources indicated above.

Additional Information about the Cole Merger and Where to Find It

Page 34: ARCP and Cole Merger to Create World's Largest Net Lease REIT

34

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any

vote or approval. In connection with the proposed ARCT IV merger, ARCP and ARCT IV expect to prepare and file with the SEC

an amendment to their proxy statement/prospectus and ARCP expects to prepare and file with the SEC an amendment to its

registration statement on Form S-4 and other documents with respect to ARCP’s proposed acquisition of ARCT IV. INVESTORS

ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT (INCLUDING ALL

AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF

AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE

PROPOSED ARCT IV MERGER.

Investors may obtain free copies of the registration statement, the proxy statement/prospectus and other relevant documents filed

by ARCP and ARCT IV with the SEC (if and when they become available) through the website maintained by the SEC at

www.sec.gov. Copies of the documents filed by ARCP with the SEC are also available free of charge on ARCP’s website at

www.arcpreit.com and copies of the documents filed by ARCT IV with the SEC are available free of charge on ARCT IV’s website

at www.arct-4.com.

ARCP, ARCT IV, AR Capital, LLC and their respective directors and executive officers may be deemed to be participants in the

solicitation of proxies from ARCT IV’s stockholders in respect of the proposed ARCT IV merger. Information regarding ARCP’s

directors and executive officers can be found in ARCP’s definitive proxy statement filed with the SEC on April 30, 2013.

Information regarding ARCT IV’s directors and executive officers can be found in ARCT IV’s definitive proxy statement filed with

the SEC on April 30, 2013. Additional information regarding the interests of such potential participants will be included in the

proxy statement/prospectus, the registration statement and other relevant documents filed with the SEC in connection with the

proposed ARCT IV merger if and when they become available. These documents are available free of charge on the SEC’s website

and from ARCP or ARCT IV, as applicable, using the sources indicated above.

Additional Information about the ARCT IV Merger and Where to Find It